Is there money for Montana farmers who capture global-warming gases?

January 29, 2003

MSU crop rotation researcher Perry Miller is working with six Montana producers in the Golden Triangle to determine how much carbon is stored in their soils under various tillage systems and crop rotations. High-Res Available

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The buzz is just starting. It says that you can make money by trapping greenhouse gases in the soil. You hear phrases like "banking carbon credits" or "carbon sequestration."

Is there a new agricultural market out there?

Probably, say Montana State University - Bozeman economists. Montana has over 17 million cropland acres, and a majority of this land is suitable for additional carbon storage if farmers implement appropriate cultural practices, says MSU Economist Susan Capalbo. She and other MSU researchers have a $1.3 million grant as part of the Consortium for Agricultural Soils Mitigation of Greenhouse Gases. Eight other universities, a national laboratory and several USDA agencies are also participating in this $15 million research project.

The basic idea is simple. Carbon dioxide producers would pay farmers whose crops pull carbon dioxide from the atmosphere as part of photosynthesis. Normal tillage releases part of the carbon, but farmers can use reduced-tillage systems that increase carbon storage. The carbon storage is in the form of soil organic matter. Increasing carbon in soils, decreases carbon dioxide in the atmosphere. Carbon dioxide is the most talked about of the "greenhouse gases." Nitrous oxide is another. Both are byproducts of burning any fossil fuel, whether to power a wood stove, an electrical generator, or our cars and trucks.

Capalbo says MSU economists are determining the costs of carbon sequestration to farmers, how to document how much carbon could be stored and its value. That will help greenhouse-gas-producing businesses determine whether purchasing such storage from Montana farmers will be economical as a means of offsetting their emissions.

The results from the MSU research will provide the data and analysis needed if a carbon sequestion market is to thrive. The market already is forming, says Ted Dodge of the National Carbon Offset Coalition, a Montana nonprofit organization headquartered in Bozeman. The coalition is a carbon credit trading program. The sums paid for carbon storage to date in the fledgling market are largely not a matter of public record, says Dodge.

One reason a market may develop for storing carbon is the Kyoto Agreement, in which many nations agreed to reduce their greenhouse gas emissions in hopes of reducing global warming. The United States did not sign the Kyoto Agreement, but President George W. Bush said in February 2002 that the United States "will look for ways to increase the amount of carbon stored by America's farms and forests through a strong conservation title in the farm bill." He also said he would like to see "new targeted incentives for landowners to increase carbon storage."

The net benefit of those incentives to individual producers are unknown. We don't yet know how much it costs farmers to increase carbon storage in various soils, so it's impossible to know what incentive levels are necessary for a "win-win" carbon storage scenario. Montana farmers often use carbon-storing practices, like no-till farming, continuous cropping and growing nitrogen-fixing crops, because they are good for the soil, increasing its ability to hold water and to provide nutrients for crops. However, many of the practices require special equipment. The costs, amount and value of carbon stored vary with the climate, soil, precipitation and farming practices.

To find answers, MSU crop rotation researcher Perry Miller is working with six Montana producers in the Golden Triangle to determine how much carbon is stored in their soils under various tillage systems and crop rotations. Miller, soil nutrient management researcher Rick Engel, remote sensing researcher Rick Lawrence and economists John Antle, Susan Capalbo, Linda Young and Duane Griffith hope to determine whether the emerging carbon market will offer enough incentive for Montana producers to participate.

The MSU economists will gather information on what it costs farmers to store carbon, so if they are offered or seek a contract in the new market, they'll know whether it is financially worthwhile. As market data becomes available, Griffith, an MSU Extension Service farm management economist, will end up with cost estimates for every step of the process, from simply continuing no-till practices to purchasing equipment to be able to begin no-till.

Griffith says that one of MSU's responsibilities under the CASMGS grant is to develop software for Montana producers to use on their home computers. This software will estimate the costs of farming practices designed to store carbon and the amount of carbon stored. This information can be compared to the potential benefits of participating in carbon markets. If benefits are greater than costs, the incentives are clearly there.

As with any contract, proof of delivery is important if you want to get paid. Since this product stays in the ground, how do you prove you delivered?

Enter Lawrence and satellite technology. Analyzing visible light and infrared imaging, Lawrence, Miller and graduate student Ross Bricklemyer think they can get the cost of measuring carbon storage down to pennies per acre. Working with Chester farmer Janice Mattson, Bricklemyer's work has already shown that such sensing can substantiate whether a field has been tilled or not.

"Next we'll see whether we can identify the crops themselves, the amount of soil disturbance and the amount of residue left," says Lawrence.

"There are markets starting up in those parts of the world that signed up for the Kyoto Agreement," says Dodge. "In the United States, there is no existing market, but there will be a volunteer market in existence early next year called the Chicago Climate Exchange." The founding members of the Exchange were announced Jan. 16, and include such companies as DuPont, Ford Motor Company and International Paper. Members have made a legally binding commitment to reduce their greenhouse gas emissions by four percent below their 1998-2001 average by 2006, according to a news release on the Exchange web site, http://www.chicagoclimatex.com.

Part of the research will be completed in the two years covered by the first CASMGS grant, though Miller hopes to track data for five to 10 years. During the carbon study, Miller and Engel also will be gathering information on nitrous oxide storage. They think that nitrous oxide will be the next issue at the forefront of the global warming debate.